From Crypto to Embryos and Pets: What You Can and Can't Put in a Prenup with Laura Wasser

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• While parties can write almost anything into a prenup, the most effective lawyers will only include clauses that are legally enforceable, as judges may strike down unenforceable terms like those related to weight gain or minor household habits.  Copied to clipboard!
• Prenuptial agreements should be viewed as essential 'marriage planning' that forces couples to have critical, albeit awkward, financial and life-planning conversations before marriage, rather than being seen as 'divorce planning.'  Copied to clipboard!
• Prenups are generally enforceable regarding the division of assets and spousal support, but clauses that promote divorce (like sunset clauses) or attempt to govern personal behavior outside of financial matters are often deemed unenforceable or unconscionable.  Copied to clipboard!

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Prenup Enforceability and Clauses

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(00:04:24)

• Key Takeaway: Clauses related to personal behavior, like infidelity or sobriety, are often unenforceable, leading reputable firms to avoid including them in prenuptial agreements.
• Summary: Judges are unlikely to enforce clauses based on personal conduct, such as infidelity or sobriety, even if written into a prenup. Requests like penalizing a spouse for not losing baby weight are considered ridiculous and will not be upheld. Lawyers generally limit prenups to enforceable terms, primarily concerning asset division and spousal support.

Challenging Prenuptial Agreements

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(00:07:22)

• Key Takeaway: Prenuptial agreements are frequently challenged on grounds of duress or unconscionability, but these arguments often fail, especially if the agreement includes a prevailing party clause.
• Summary: Arguments challenging a prenup, such as claims of duress or unconscionability, generally do not hold up in court. California law mandates a seven-day period between final agreement and signing to mitigate duress claims. Waiving spousal support when one party has zero earning potential might be deemed unconscionable.

Estate Provisions and Postnups

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(00:09:03)

• Key Takeaway: Prenuptial agreements can secure estate provisions, like continued residency in a shared home, which are more stable than a changeable will.
• Summary: Estate provisions, such as ensuring continued residency in a home after a spouse’s death, can be secured in a prenup because the agreement is harder to change than a will. Postnuptial agreements are trickier because they must clearly show the intention is to remain married, not to negotiate a divorce.

Prenups as Marriage Planning

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(00:10:12)

• Key Takeaway: Asking for a prenup is marriage planning because marriage itself is a contract governed by state law, which a prenup allows couples to define themselves.
• Summary: Couples should view prenups as defining the terms of their marriage contract, which is more important than other wedding contracts. Without a prenup, the state dictates the terms of the marriage contract upon divorce. Understanding the default state laws regarding income division and spousal support is crucial before marrying.

Divorce Venue and Jurisdiction

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(00:12:05)

• Key Takeaway: Divorce jurisdiction is typically determined by where a person lives for six months prior to filing, but a prenup can include a choice of law clause to control asset division rules.
• Summary: Divorce proceedings occur in the state where the couple resides for the six months preceding the filing, which can lead to ‘forum shopping.’ A prenup can specify that a particular state’s law controls the agreement’s terms, excluding child custody and support matters. This choice of law provision simplifies proceedings by avoiding arguments over jurisdiction.

Embryo and Pet Custody Issues

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(00:13:39)

• Key Takeaway: Embryos are treated as assets with enforceable agreements dictated by fertility clinic contracts, whereas pets are increasingly being awarded based on who provided care.
• Summary: Agreements regarding frozen embryos must align with fertility clinic contracts, which specify disposition upon divorce or death. Historically, pets were treated as property, but courts are now considering factors like who provided care when determining custody. One extreme case involved a spouse intentionally sickening the shared cats to cause distress to the other party.

Social Media and Non-Disparagement

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(00:16:49)

• Key Takeaway: Social media followers are generally considered part of a creator’s business entity (like a C Corp), but the income generated from those followers may be subject to division.
• Summary: If a creator’s likeness and followers are tied to a separate entity, the followers themselves are not simply awarded, but the income they generate can be shared with the ex-spouse. Non-disparagement clauses are common in both prenups and divorce judgments, especially when children are involved, to prevent public negative commentary. Enforcement of non-disparagement clauses can be difficult due to free speech concerns on social media platforms.

Sunset Clauses and Modifying Agreements

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(00:19:05)

• Key Takeaway: Sunset clauses, which void a prenup after a set number of years, are generally avoided by lawyers because they can be seen as promoting divorce.
• Summary: Clauses that nullify a prenup after a specific duration are discouraged as they might incentivize divorce near the expiration date. Prenuptial agreements are not unilaterally editable, but they can be amended later if both parties agree, particularly regarding spousal support amounts if the marital lifestyle significantly changes.

Alimony and Stay-at-Home Parent Worth

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(00:21:13)

• Key Takeaway: A stay-at-home parent’s contribution to the family, especially in raising children, must be acknowledged in discussions about spousal support based on the marital lifestyle.
• Summary: Conversations about a stay-at-home parent’s financial worth should not be awkward, as childcare is a vital partnership contribution. If a spouse forgoes career advancement to raise children, the prenup should reflect the expectation of sharing in the marital lifestyle’s success. Child support for additional children is determined by law and is generally not overridden by a prenup.

Second Generation Wealth and Tech

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(00:25:18)

• Key Takeaway: Second-generation wealth recipients often need clauses protecting parental trust funds from being considered marital assets supporting an ex-spouse.
• Summary: When younger individuals with expected inheritance marry, prenups must address whether parental support payments constitute marital lifestyle expenses. Courts may attempt to replicate the benefits of family assets, like private jet use, through first-class travel allowances if the original asset is unavailable post-divorce. The impact of technologies like ChatGPT and digital tracking in custody disputes is still emerging in court proceedings.

Hiding Assets and Financial Transparency

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(00:32:03)

• Key Takeaway: Courts can charge a spouse with the value of undisclosed assets like lost crypto, and forensic accountants are used to trace the money used to purchase those assets.
• Summary: Full disclosure of all assets, including crypto, is required in a prenup exhibit, and seed codes should ideally be shared to prevent claims of loss. If crypto disappears, the spouse who owned it is charged for the community’s share of the purchase price, even if the asset appreciated. Hiding cash is difficult, as judges can estimate income from cash-based professions like tour management.

Preparing for Potential Divorce

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(00:35:24)

• Key Takeaway: In preparation for a potentially abusive divorce, securing access to funds, even by taking small ATM withdrawals, is suggested for self-protection and legal fees.
• Summary: Women, in particular, are advised to actively participate in financial meetings to avoid abdicating financial responsibility to their spouse. If divorce seems imminent, securing personal access to funds is crucial, though the money must eventually be accounted for during disclosure. Proactive financial education, often spurred by divorce, is far more effective than reactive learning.

Checklist for Divorce Preparation

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(00:38:30)

• Key Takeaway: If divorce is considered, individuals should immediately research state law and begin documenting the four financial corners: assets, debts, income, and expenses.
• Summary: Start by understanding your state’s divorce laws, perhaps using educational resources like divorce.com. Documenting assets, debts, income (by reviewing tax returns), and expenses provides a clear financial picture. Seeking counseling, even if not for reconciliation, can ensure financial education occurs without escalating conflict.

Cohabitation Agreements and Communication

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(00:42:51)

• Key Takeaway: Couples cohabiting without marriage should consider a cohabitation agreement to explicitly define financial boundaries, especially regarding support upon separation.
• Summary: If finances are unequal in a non-marital partnership, a cohabitation agreement clarifies that earned income remains separate property and that no spousal support will be paid if they separate. Open communication about finances is the most important relationship tool, even when discussing uncomfortable topics like future support or parental roles. Premarital counseling equips couples with tools to handle inevitable relationship difficulties.